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HMRC internal manual

National Insurance Manual

Class 1: Calculating Class 1 NICs for Directors: Annual earnings periods: Directorship ceases and employment starts

Regulation 8(3) SSCR 2001

If a company pays earnings to a former director in respect of the directorship andthose earnings are paid in the same tax year as the one in which the directorship ends,those earnings must be added to the earnings received as a director and NICs calculatedusing the director’s earnings period.

If the director becomes an employee of the same company, the NICs due on earnings receivedas an employee must also be calculated using the director’s earnings period.

If the former director continues to receive earnings as an employee the earnings periodchanges to the appropriate one for the new employment at the beginning of the next taxyear.